HCCF-3 LLC Business Plan Confidential – Do Not DistributeHarbor City Capital is scaling it’s...
Transcript of HCCF-3 LLC Business Plan Confidential – Do Not DistributeHarbor City Capital is scaling it’s...
HCCF-3 LLC Business Plan
Confidential – Do Not Distribute
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This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of any offer to buy securities. Any such offer or solicitation will be made only by means of a confidential Private Placement Memorandum and in accordance with the terms of all applicable securities and other laws. None of the information or analyses presented are intended to form the basis for any investment decision.
This presentation contains forward-looking statements, and nothing contained in it is, or should be relied upon as, a promise, guaranty, or representation as to the portfolio allocations or future performance. Any statements, estimates, or projections with respect to such future performance are based on assumptions which may or may not prove to be correct.
DISCLAIMER
Harbor City Group100 Rialto Place, Suite 700Melbourne, FL 32901(321) 608-0605 US/Intl.(888) 528-4540 US Toll Freewww.HarborCity.com
JP MaroneyFounder/[email protected](321) 608-0605 x 704
Devaughn DamesChief Financial [email protected](321) 608-0605 x 707
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Harbor City discovered a high-yield, niche investment opportunity hidden in the $200 Billion internet advertising sector — providing bridge funding for high-ROI online lead generation campaigns.
These campaigns consistently generate 20%-45% ROI in 90-days or less. We provide the funding to cover the 30-90 day gap between when the campaigns generate the leads and when they get paid for the leads.
The funding is provided as a line of credit that is guaranteed by a UCC-1 filed lien against accounts receivables and purchase orders as collateral. This mitigates our risk of capital loss by providing us a secure position with guaranteed repayment, and allows us to safely earn 2-3% every 30 days for providing the campaign funding.
Harbor City Capital is scaling it’s campaign funding capacity via HCCF-3 LLC by issuing $1 Million in secured 2-year bonds that pay 1.5% each month in current interest income to bond holders with full return of principal at maturity. Our collateralized guarantee when funding the campaigns provides investors a safe way to earn 18% annual yield with monthly cashflow.
The par value of each bond is $1,000 with a minimum investment of $50,000, and is available only to accredited investors. The bonds are issued via HCCF-3 LLC, a special funding vehicle managed by Harbor City Capital Corp, and the campaigns are executed by Harbor City Digital Ventures, Inc.
EXECUTIVE SUMMARY
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WHAT IS HCCF-3 LLC?u A Nevada limited liability companyu Wholly owned by Harbor City Capital Corpu Created as a special purpose vehicle to issue 18% High Yield Bondsu 100% devoted to funding digital media campaigns in the lead
generation sector for Harbor City Digital Ventures, Inc.
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WHAT PROBLEM DO WE SOLVE?u Harbor City Digital Ventures, Inc. (‘DV’) solves the #1 problem faced by most
companies; how to acquire new customers.u DV gives companies access to a predictable flow of new customer leads, at a fixed-
rate per lead.u Often, a 30-90 day gap exists between when DV generates the leads, and when the
company is paid for the leads, and in order to service large (10,000-100,000+) lead orders, DV needs capital funding to buy advertising to scale the campaigns and deliver leads in its demand-driven customer pipeline.
u HCCF-3 LLC provides the funding to cover that gap, and is paid 2%-3% every 30-days for providing the funding, and DV provides the accounts receivables and purchase order assets as collateral to secure the loans from HCCF-3 LLC.
Business Model
Harbor City Capital Corp(Manager)
HCCF-3 LLC(Special PurposeFunding Vehicle)
Bond Holders(Investors)
Harbor City Digital Ventures, Inc.
(Operator)
Funds used to purchase internet advertising for lead
generation campaigns.
Client Companies Pay For Leads Within 30-90 Days
Leads Delivered To Clients & Invoice Generated
1.5%/mo | 18%/yr
Bond Purchased
Funding Line Of Credit
2-3%/mo
Return of principal 2-yr maturity date
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HOW HCCF-3 LLC AND ITS INVESTORS MAKE MONEYu HCCF-3 LLC funds digital media campaigns by providing a line of
credit secured by real assets including accounts receivables and purchase orders.
u HCCF-3 LLC receives interest income of 2%-3% every 30-days for money loaned to fund the campaigns.
u Investors in HCCF-3 LLC’s 18% High Yield Bonds receive 1.5% per month in yield for their investment, an 18% annual return on investment.
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HOW SAFE IS THIS AND WHAT ARE THE RISKS?u HCCF-3 LLC provides the funding for campaigns via a transparent,
written contract between HCCF-3 LLC and Harbor City Digital Ventures, Inc. (‘DV’)
u The contract gives HCCF-3 LLC a secured interest via a lien against DV’s accounts receivables and purchase orders.
u HCCF-3 LLC files a UCC-1 financing statement giving notice of HCCF-3 LLC’s interest in the assets pledged as collateral.
u Due to HCCF-3 LLC’s collateralized position, the principal and interest of the 18% High Yield Bonds are safe and secure.
Opportunity
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HOW BIG IS THIS INVESTMENT OPPORTUNITY?u The internet advertising sector now tops $200B per year worldwide – more than
$80B in the US, and is now bigger than TV advertising.u Companies have flocked to online client acquisition strategies in order to stay
relevant and continue attracting new customers.u Harbor City Digital Ventures, Inc. (‘DV’) has capitalized on this confused and highly
fragmented market opportunity by providing a superior solution for lead generation online with campaigns that generate 20%-45% ROI in 90-days or less.
u DV has more than $164 Million in demand-driven customer pipeline orders for its lead generation services.
u Harbor City Capital Corp has identified funding of lead generation campaigns within the internet advertising sector as a rapid growth, high-yield investment opportunity, and plans to raise additional tranches of capital via series vehicles similar to HCCF-3 LLC, with a total capital raising goal of $100M+
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“HC is uniquely executing in the Internet advertising market which is growing at a compound annual growth rate of 40%”
LARGE & GROWING MARKET OPPORTUNITY
+$2B
“A Niche Goldmine”HC currently executes its arbitrage strategy in the highly inefficient +$2B U.S. lead generation market
+$80B+$200B
Worldwide: +$200B
Internet Advertising
US Market: +$80B
US Lead Generation: +$2B
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One of the greatest rising tides of our time is the Digital Revolution!
The digital revolution: INTERNET USERS
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One of the greatest rising tides of our time is the Digital Revolution!
The digital revolution: ONLINE BUYING
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One of the greatest rising tides of our time is the Digital Revolution!
The digital revolution: DIGITAL ADVERTISING
Market Analysis
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HC provides businesses with exactly what they want… a source of new customers that is:u Measurable: Accurate insight into what’s working, what’s
not, and what’s profitable.u Predictable: Avoid the peaks and valleys of traditional
“spray and pray” marketing efforts.u Scalable: Plan and execute business objectives.
When deciding what a new customer lead is worth, companies must consider:u Customer Lifetime Value (LTV): How much money an average
customer is worth over their lifetime.u Customer Acquisition Cost (CAC): Calculated by dividing all costs
spent acquiring customers (marketing expenses) by the number of customers acquired in the period the money was spent.
u Lead Conversion Rate (LCR): How many prospective customers (aka leads) need to be acquired to convert a new customer.
u Cost Per Lead (CPL): How much it costs for the company to acquire a lead through advertising or buying leads.
KEY DRIVERS OF DEMAND FOR NEW CUSTOMER LEADS
Companies invest in new customer leads because the numbers make business and financial sense.
Example: Let’s say a company knows that each customer is worth $3,000 (LTV), and that it needs 10 prospective leads to get one customer (10% lead conversion rate). If the company could buy leads for $50 they would only be investing $500 (CAC) to acquire a customer worth $3,000… An easy decision!
“Buying quality new customer leads is like trading dimes for dollars!”
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WHY NEW CUSTOMER LEADS SELL FOR LARGE PREMIUMS
u More than 78% of organizations have engaged in online lead generation programs throughout the last year, but only about 17% of these companies are actually meeting their lead generation goals.
u 63% of marketers say generating traffic and leads is their top challenge.
u 80% of marketers report their lead generation efforts are only slightly or somewhat effective.
u Lack of resources, such as staff, funding, and time, remains the biggest obstacle to successful lead generation for 61% of B2B marketers.
u Despite rapidly growing investment in social advertising, 46 percent of B2B marketers say they’re unsure whether their channels have generated any revenue for their business.
u 70% of marketers say converting leads is their top priority.
“76% of Chief Marketing Officers consider lead generation their biggest challenge.”
-- Marketing Sherpa
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NEW CUSTOMER LEADS = $2B NICHE GOLDMINEWithin the behemoth +$80B U.S. digital advertising market, HC has uncovered and is actively exploiting ahighly profitable niche market in the U.S. lead generation space that exceeds $2B.
Performance-Based Internet Lead Generation: Unlike other forms of traditional advertising where fees are paid up front anddo not depend upon the success of the ads, with performance-based lead generation the advertiser pays only when a specific action is completed;such as an inquiry form completion, a webinar registration, an app download, a quote request, a white paper is downloaded, etc. This shift inmarketing has successfully reversed the traditional value proposition of advertising and also allows for real-time measurement of ROI.
5 Reasons Why Harbor City IsWinning In This Profitable Niche:1. Competing On A Road Less Traveled2. Fragmented & Highly Inefficient3. A Disciplined Approach4. High Demand, High Margins5. Leads Sell For A Large Premium
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PROVEN LEADERSHIP TEAM
JP MaroneyFounder/CEO
JP Maroney is an American entrepreneur and investor with more than25-years experience starting, building, buying, and selling companies inpublishing, media, advertising, software, ecommerce, training, realestate, and consulting. After more than a decade building digital-basedbusinesses, JP Maroney founded Harbor City Capital Management, analternative investment firm specializing in lead data arbitrage withinthe $200B Internet advertising sector. Since inception in 2013, the firmhas generated double-digit annual returns for investors. A recognizedbusiness growth and marketing industry leader, JP Maroney also servesas advisor or board member with several other companies. Current andpast clients include: Wells Fargo, Century21, Precision AutoTune, TheMaids, Metric Property Management / BlackRock, National ApartmentAssociation, Independent Bankers Association of Texas, TexasAssociation of Business, Texas Credit Union League, and numerousother franchises, corporations, and trade associations.
John McLeanSVP Operations
For over 35 years John McLean has served as a consultant or corporateofficer leading domestic and international operations. He has managedcorporate intellectual property for firms and has been issued patentsfor his inventions. John has worked as a consultant to major oilcompanies, aerospace and other Fortune 500 companies along withextensive work with NASA, Navy and Army including municipal, stateand Federal agencies. Many of these projects involved processimprovement or innovative solutions to problems. He earned a BBA inFinance from Baylor University and BS in Civil Engineering from TexasA&M University including post graduate work in environmentalengineering. John is a registered Professional Engineer and has aLean/Six Sigma Black Belt. Additionally he holds certification inAmerican Petroleum Institute’s Q1 Specification for qualityimprovement.
Michael HadzipanajotisChief Financial Officer
Michael Hadzipanajotis is an accomplished Senior Executive/ CFO andCPA with more than 15 years of success in the banking, financialservices, and accounting industries. Leveraging extensive experiencewith auditing and accounting, His broad areas of expertise includeaccounting, expansion, marketing, process improvement, IT, finance,financial analysis, banking, risk management, investments, and internalcontrols. Throughout his executive career, Michael has held leadershippositions with Santander Bank, N.A.; MIT Federal Credit Union; RadiusBank; The Bank of New York Mellon Corporation, and Rockland Trust.He has overseen management of $6B private banking, $150Minvestment, $250M residential mortgage, and $1.5B commerciallending portfolios. Michael holds an MBA from Auburn University,College of Business and a BS, Accountancy from Bentley University. Heis a Certified Public Accountant by the Commonwealth ofMassachusetts.
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PRO FORMA FINANCIALS
*HCCF-3 LLC is a special purpose funding vehicle wholly owned and managed by Harbor City Capital Corp. The entity has no employees, and will be charged no management fee. The only potential expenses include sales costs from the bond sale, plus legal and accounting expenses.
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APPENDIXHarbor City Digital Ventures, Inc.
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Real Estate
Legal
Business Services
Harbor City Digital Ventures, Inc.
Offer 1
Offer 2
Offer 3
Offer 4
Financial Services
Home Services
Offer 5
Campaign 1
Campaign 2
Campaign 3
Campaign 4
Campaign 5
Campaign 6
MORE CAPITAL + MORE CAMPAIGNS = MORE ROI
HC’s 2018 strategic plan includes diversified campaigns across a variety of profitable online lead generation verticals (e.g., Real Estate, Financial Services, Home Services, etc).
Each portfolio vertical contains multiple offers (e.g., Company 1, Company 2, Company 3).
Each offer is split between a variety of campaigns, typically over different platforms (Facebook, Google, or Email broadcast.
A Repeatable, Highly Scalable Business Model
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USE OF PROCEEDS: FUNDING A DEMAND-DRIVEN PIPELINE
Strong & Predictable Profit Margins
Margins By Industry
Harbor City’s current pipeline is extensive and rich with opportunity. The following represents the current pent-up, in-bound demand from various operating companies seeking HC’s services and expertise. Proceeds from this capital raise will be used to fund the ramp-up in lead production needed to service the current client pipeline, and could begin creating predictable ROI as soon as 3-months from deployment.
Use Of ProceedsFinancial ServicesReal EstateSenior HealthcareLegal ServicesBusiness ServicesHome Services
15%15%20%15%10%25%
100%
Harbor City’s Proven Arbitrage StrategyGenerates HIGH RETURNS
At Relatively LOW RISK!
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Standard INVESTMENT risk/reward graphre
turn
s
risk
Low risk –low returns
high risk – high potential returns
In traditional investment models, the higher the return, the higher the risk – the lower the risk, the lower the return.
However, Harbor City has redefined the risk-reward model by consistently generating HIGH RETURNS with
relatively LOW RISK by executing within tight guardrails.
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Stage One: TestHC takes a value-based approach to testing new campaigns. By implementing a ‘test-first’ strategy HC protects the downside by setting loss limits on new campaigns. These limits approximate $500 per day and extend over a maximum 10-day period per campaign. Through proprietary technology and a systematic executional approach, HC implements, observes and analyzes each new campaign to tightly controlled precision limits over this 10-day period. The dynamic measured to determine the quality of a new campaign is the cost it takes to acquire a lead (“CPA”) relative to the earnings generated from that lead on the supply side (“EPL”).
Stage Two: ScaleOnce the dynamic is working in HC’s favor (EPL > CPA) relative to certain pre-established hurdle rates, HC begins scaling up the dollars invested by 10-20%/day until reaching the target daily output of leads. Upon reaching this target daily output, HC monitors closely, utilizing tight guardrails to measure a campaign's performance against established benchmarks and KPI’s.
Stage Three: ManageEach campaign follows a natural life-cycle where an element of fatigue eventually sets-in whereby the EPL relative to CPA dynamic begins to reduce. HC utilizes automation tools and basic levels of pattern recognition to observe these realities. Before a campaign ever approaches a negative ROI, the campaign is ended and dollars are reallocated into newer, higher-ROI generating campaigns that are in scale-mode.
1. Test
2. Scale 3. Manage
This example graphic shows how during the test period we’re at a net loss PER LEAD while we optimize to campaign during our tightly controlled testing period. It then shows how we cross the threshold into profitability, scale the campaign then the ongoing management.
capital preservation = TEST, SCALE, MANAGE!How We Execute
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OUR TECHNOLOGY-DRIVEN & FORMULAIC APPROACHHow We Execute
Situational Analysis
Determine campaign KPI’s. Define target CPA ($/lead/day-week-month). Map end-to-end click to conversion
process
Audience Research Creative Development
Campaign Planning Controlled Testing Measure & Manage
Research target market for campaign offer. Conduct in depth analysis of target avatar using latest analytics
tools. Leverage existing data for audience modeling
Find and analyze relevant campaigns already performing in the market.
Model, develop, and improve advertising collateral
Conduct channel analysis for suitability in regards to marketing channels, site
traffic, geographic, age, gender, language, interests, behaviors,
connections, and dozens of additional filtering options
Leverage analytics and optimization to achieve positive ROI, then
incrementally increase media spending until target KPI’s
are achieved.
Monitor metrics for campaign creative fatigue. Utilize automation functions
and proprietary algorithms to maintain performance
“We execute against tight guard rails, limiting our loss exposure by protecting our downside and scaling up aggressively into what is working.”
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converting raw INTERNET USERS into valuable leadsHow We Execute
180 million US users on Facebook
Refined audience selection of 30 million
3 million impressions (people saw the ad)
150,000 clicks (visitors to the landing page)
15% Conversion Rate=
22,500 leads generated
HC filters and refines raw Internet traffic and data to generate highly valuable new customer leads that are supplied to companies in profitable verticals.
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3 ways HARBOR CITY maintains a Robust,DEMAND-DRIVEN deal flow pipeline
Endless Demand From:
1. Direct Advertisers
2. CPA Networks
3. Agencies
4. Lead Aggregators
5. Publishers
1. HC maintains a portfolio of standing purchase orders from ready lead buyers across a wide variety of industry verticals, creating insatiable demand and insuring virtually unlimited scalability.
2. HC maintains a high profile within the performance marketing industry by speaking at key events, delivering regular educational webinars, participating in media and podcast interviews, networking heavily within the industry, and exhibiting at specialized events.
3. HC recruits team members with deep networks within the performance marketing, digital advertising, and lead generation industries -- and within our portfolio verticals.
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OUR COMPETITIVE ADVANTAGESHow We’re Creating High Barriers To Entryu Most traditional lead generation companies or agencies focus on a specific industry or
vertical. HC is industry agnostic, so we can strategically exploit the most profitable verticals, offers and campaigns, then pivot as the landscape changes.
u Unlike platforms such as Facebook, Google, Bing, etc., HC is advertising channel agnostic so we can go wherever the audiences are at any given point. As advertising platforms come and go, we can redeploy our capital and efforts rather than being “locked” into a dying channel.
u While most lead generation companies see leads as a transactional commodity, HC views lead records as “DATA ASSETS” that are durable and appreciable. HC repurposes and remonetizes lead data with additional offers to increase the gross profits derived from any lead. And, while the lead acquisition costs remains fixed, HC drives profits higher, delivering more margin to invest in advertising and allowing the team to outbid competitors.
u HC is far more than “a lead generation company” – it’s a big data acquisition, mining, and monetization PLATFORM that leverages a massive marketing data cache, proprietary artificial intelligence and machine learning processes, and highly skilled human capital in order to create valued new customer leads more effectively and profitably than any other solution. The HC team continuously seeks out and develops unique ways to increase performance, improve results, and deliver the ultimate product for buyers.
Big margins in the $135 Billion Digital marketing niche
HarborCity
We provide growing companies with a predictable, profitable “digital pipeline”
of new customer leads.
We Get PAID For Every Action!
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CASE STUDY: PERSONAL INJURY PAY-PER-CALL LEADSTotal Capital Investment $279,530
Calls Generated 5,844
Average Cost Per Call $47.83
Conversion Rate 22%
Conversions 1,286
Cost Per Conversion $217.42
Revenue Per Conversion $300
Campaign Revenue $385,704
Campaign Expenses $41,930
Campaign Profit $64,245
Campaign Qtrly ROI 23%
Annualized Return On Investment 92%
$300 revenue generated for each qualified call to
participating law firms.
“Attorneys gladly pay $300/call knowing 30%-40% turn into cases worth +$15,000 legal fees.”
(uncompounded)
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CASE STUDY: mortgage refinance leadsTotal Capital Investment $18,521
Clicks Generated 40,633
Average Cost Per Click $.46
Conversion Rate 1.6%
Conversions 650
Cost Per Conversion $28.49
Revenue Per Conversion $37
Campaign Revenue $24,055
Campaign Expenses $2,778
Campaign Profit $2,755
Campaign Qtrly ROI 15%
Annualized Return On Investment 60%
$37 revenue per lead generated by sending qualified
traffic to landing page.
“Lead aggregator pays $37 per lead, then resells to mortgage brokers who earn +$3,000 per origination.”
(uncompounded)
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CASE STUDY: student loan forgivenessTotal Capital Investment $49,910
Clicks Generated 145,743
Average Cost Per Click $.34
Conversion Rate 6%
Conversions 8,890
Cost Per Conversion $5.61
Revenue Per Conversion $11
Campaign Revenue $97,794
Campaign Expenses $8,984
Campaign Profit $38,900
Campaign Qtrly ROI 78%
Annualized Return On Investment 312%
$11 revenue per lead generated by sending qualified
traffic to landing page.
“44 million borrowers owe over $1.45 trillion in student loan debt – a huge, rabid market opportunity.”
(uncompounded)
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